Welcome back Londoners! This week, the New Year's Eve fallout continues its downward spiral, the Ladies move forward with building their business empires and Sophie's birthday party brings the women together to argue over who's actually supposed to be fighting with Caroline Stanbury. Ready? Here we go!

The episode starts with Juliet going to meet Caroline at the Gift Library offices to put an end to their unicorn husband-humping beef. As she drives through London, Juliet via confessional that London is really a small town where the littlest rumor (like...say...Caroline Stanbury threatened to gun down your family in the middle of the street) can get blown out proportion before you ever have a chance to do damage control. Once she arrives at Gift Library, Juliet promptly owns up to venting about what Caroline said, but blames Julie for spreading the gossip to Annabelle and making the story even bigger. Caroline can't believe Juliet would tell Julie - a.k.a. the "village f***ing foghorn" something so salacious and likens her friend to Bam Bam for managing to create chaos wherever she goes. Fix this, Caroline says. The last things she wants is for this to be an issue at Sophie's upcoming birthday party. She has enough to deal with without being pulled into more gossip.

Across town, Marissa and Matt are on a date at Cambio del Tercio. Because of Matt's connections as a restauranteur, the Hermers always manage to get the chef's table and tonight is no exception. Over dinner, conversation turns inevitably to Top Dog - Marissa is worried the new project will take her away from being able to do things like bath time and picking up her kids from school. She points out in her interview that the term "working mom" is an oxymoron of the highest degree because being a mom is a full-time job. Matt reassures her that he's always there to help, and if things go horribly wrong the kids will still be there and the house too...probably. I love seeing Marissa and Matt's relationship on screen. They're both so supportive of each other, it's nice to see a truly equal marriage on TV.

The next day, Julie and Annabelle meet at some sort of health food juice bar to rehash the drama with Juliet from the week before. Lady Hinchingbrooke hasn't spoken to Juliet since she stormed out after their lunch and left Julie wondering what she did wrong. After all, Juliet was the one who told her what Caroline said in the first place, she merely came to the lunch assuming they would continue the conversation. Via confessional, Annabelle points out that Juliet should've gone directly to Caroline and reiterates that the American is "absolutely" lying about everything that went down. Annabelle thinks it's crazy that the two Julie(t)s are now fighting with each other instead of each confronting Caroline. Yes, Caroline can be cruel, but she has to know it's not OK to behave this way with the other Ladies. The thought of confronting Caroline terrifies Julie, who doesn't want to get on the queen bee's bad side. Annabelle rightfully advises her that nothing get solved without directly confronting the problem. Plus, if Julie's going to talk about it to other people, she might as well say it to Caroline's face, right? Stand up for yourself and take control, Montagu!

Meanwhile, Caroline Fleming is tra-la-la-ing around her flat when her therapist (yet another Caroline) drops by for a house call. The Baroness thinks therapy is "incredible," calling a good therapist one of life's greatest gifts. However, her approach to therapy is kind of hilarious. Poor Caroline #3 can't seem to get a word in edgewise as Caroline #2 talks over her and goes off on a tangent about the younger man in her life. The Baroness is a cougar! She won't reveal the identity of her new mystery man, but assures us that she's feeling like a giddy 16-year-old again. The therapist leaves having said all of two words, but Caroline Fleming sees her out by saying she's so glad she could get input from others and make sure her life's journey is on the right path. I find this quirky Dutch baroness mightily entertaining.

Caroline Stanbury and her sister-in-law Sophie meet up at the Good Life Eatery to discuss the New Year's Eve nonsense and Sophie's upcoming birthday party. Caroline doesn't even want to give the drama with Julie any more air and Sophie agrees, saying the American aristocrat made a mountain out of a molehill. Sophie sent the invites out for her party and the responses from the Ladies were a bit mixed. While Marissa sent back a thoughtful note, Juliet rather brusquely asked where the party would be held and that was it. Caroline explains that Juliet doesn't exactly have a relaxed, thoughtful personality - you never quite know what will set her off. If the same type of drama continues with Juliet, Caroline promises that she'll be cut out of her life. The queen bee is fighting every day in the office to keep her business afloat, she's not about to fight in her personal life as well. And speaking of Gift Library, things are continuing to go poorly as Caroline realizes she just can't do it all by herself.

While Caroline's business continues its downward spiral, Marissa and Julie's new ventures are headed toward launch. To bring her California dream to life, Marissa enlists the help of branding expert Damien Mould, who's worked with everyone from David Beckham and Warner Music to Nike and Louis Vuitton. Meanwhile, Julie is meeting with potential investors to take JUB to the next level and help save Mapperton. While presenting to the roundtable of potential investors (is this in a house?), Julie is nervous but conveys her passion for the product and excitement to continue growing it. In the end, the investors decide to go into business with her and she gets the $150,000 of funding she needs to kickstart her business. Go Marissa! Go Julie! I love seeing the Americans build their empires and making names for themselves in London.

The night of Sophie's fiesta-themed party arrives and the restaurant is decorated with plenty of skulls straight out of Dia de los Muertos. Annabelle and Julie are taking a cab together and on the way, Annabelle notices that her friend seems to be bringing two separate gifts to the party. Somewhat sheepishly, Julie admits that rather than take Annabelle's advice to stand up for herself, she's decided to give Caroline an olive branch in the form of an "I'm sorry" present. In her confessional, Julie defends her decision by claiming that she's just not wired to be confrontational - she would rather be Caroline Stanbury's friend than her enemy. Annabelle is baffled by Julie's decision to bring a gift. She's still sure that the only way to deal with Caroline is to stand up to her, but Julie's made up her mind. However, the party is the first time Julie has seen Caroline since New Year's Eve and as she she walks into the party, her confidence evaporates and she's left shaking in her heels.

Almost immediately after the hellos and air kisses, Julie pulls Caroline aside to give her the "I'm sorry" gift, which turns out to be one of her Kale brand t-shirts. Caroline accepts the gift graciously and assures an overeager Julie that things are fine between them. It's clear all she wants to do at this point is move on from the whole drama. Across the room, Juliet can't believe what she's seeing. Wasn't Julie just telling her the day before to confront Caroline and take her on? Giving her a gift at someone else's birthday party isn't exactly practicing what you preach. The party turns out to be a wild affair complete with a sex toy-filled unicorn piñata courtesy of Caroline. As Sophie stabs the unicorn with a knife (WHAT?), it breaks open, sending ball gags, nipple clamps and other mysterious items around the room. Marissa in particular is more than happy to use the nipple clamps on Juliet's mouth - do they come with glue?

In the middle of the revelry, Juliet approaches Julie from behind and jokingly pretends to choke her. Naturally, an argument ensues, though the flow of conversation is awfully difficult to follow. Juliet is angry at Julie for revealing what Caroline said to Annabelle, but Julie insists she was merely trying to be a good friend. However, Juliet accuses Julie of taking her own issues with Caroline and projecting them onto her. From the sidelines, Annabelle can't believe that the two are fighting over fighting with Caroline while the queen bee "slithers away scot free." For her part, Julie thinks Juliet has gone crazy, spinning the story to avoid Caroline's unenviable wrath and turning it on her to get away with it.

So who is turning what on whom? Both? I'm confused and agree with Annabelle - when people reach this level of insanity, sometimes you just have to let them find their own way out of the padded cell. Juliet eventually shuts down the conversation, saying she doesn't want to cause a scene at Sophie's birthday party (too late!). Julie retreats back to the table, telling an onlooking Marissa and Caroline Fleming that she couldn't get a word in edgewise and calling Juliet's behavior "unkind." Cheers to Sophie's birthday! Who wants cake?